Shares of Ally Financial Inc (NYSE:ALLY) rose in early trading on Monday after the company reported first-quarter results on Friday.

The company delivered a "strong start to the year,” according to RBC Capital Markets analyst Jon Arfstrom.

The Ally Financial Analyst: Arfstrom maintained an Outperform rating and price target of $52.

The Ally Financial Thesis: While the company reported earnings of 93 cents per share, its adjusted (core) earnings were at $1.11 per share, Arfstrom said in the note.

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Ally Financial's fundamentals were positive, while the core showed "solid momentum," with strong loan application volumes, improving credit metrics, and solid expense control, he added.

The analyst stated that the highlights of the quarterly results were:

  • A 0.6% sequential decline in net financing revenues to $1.59 billion
  • Growth of 1.4% in earning assets
  • Core margin expansion of 1 basis points (bps) sequentially
  • 1.8% sequential growth in loans to $139.9 billion
  • 1.0% sequential growth in deposits to $153.2 billion

Adjusted fees grew around 4% sequentially but remained stable from the prior year, at $572 million. Adjusted expenses rose 1.3% sequential but contracted by 6.4% year-on-year to $1.235 billion, he mentioned.

Ally Financial could deliver improved returns on the back of margin trends and credit expectations, Arfstrom said. He expects margins to improve over the remainder of the year and for Ally Financial to exit 2026 above its projected full-year range of 3.60%-3.70%.

"On credit, retail auto metrics continue to show year-over-year improvement, and our sense is the YTD trends are positioning the company well to achieve their full-year outlook," the analyst further wrote.

ALLY Price Action: Shares of Ally Financial had risen by 1.97% to $46.26 at the time of publication on Monday.

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